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Insight: Effectiveness of government measures in curbing prices

12-15-2010 08:50 BJT

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At the just concluded annual Econoimc Work Conference, China's top decision makers say they will stabilize the country's soaring food prices. Full Story>>

For more on the topic of farm produce and rising prices, Wang Guan now joins us in the studio.

Q1: You mentioned that farmers who grew the produce in your report are not making much money after the price hikes. Why is that?

WG: Well ... We did a bit of research and found out that the rising cost of labor is factor No. 1. First of all, most young men and women in the countryside have been lured by job opportunities in coastal areas, because the pay there is high, and now it's even higher, thanks to a prolonged labor shortage after the financial crisis.

Even if you find people who want to work in the field, you need to pay no less than 100 yuan a day, as opposed to just 10 or 20 just a few years ago.

The second factor is the rising cost for means of production. If we do a breakdown, we'll see that machinery costs 100 yuan, irrigation 60, fertilizer 220, pesticide 60, and seed 10. Altogether, means of production accounted for well over half of the gross revenue.

So simply put, it looks like the time of low cost agricultural production in China is becoming a thing of the past.

Q2: How effective have the government's measures been?

WG: Well, in the vegetable market this morning, we heard a lot of anger and discontent. Most people admit the price IS dropping, but the speed in which it does is too slow. And these concerns have not gone unheeded.

Local authorities across the country have taken measures, and it looks like things have stopped going from bad to worse. For example, according to Ministry of Commerce, the wholesale prices of 18 kinds of vegetables declined 5.9 percent in November. The average wholesale price of fish declined by a tenth of a percent. Price for edible oil, rice, and eggs were only moderate.

Over the next few months, the country's top decision makers ordered local governments to subsidize low-income groups and underprivileged people with cash. This ensures that they have more to spend.

Officials are also looking to subsidize transportation, in order to make the cost of moving vegetables as cheap as possible.

They want to oversee the procedure of government procurement of farm produce as well, to ensure that products are bought and sold at the proper prices.

Editor:Zhang Ning |Source: CNTV.CN

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